FRANKFURT, Germany (AP) -- German industrial production fell 1.8 percent in July compared with June, with the three main categories of output showing declines, the ministry of the economy said Friday.
The government said capital goods demand declined 3.7 percent in July versus June, while consumer goods production fell nearly 2 percent. Intermediate manufactured goods produced declined by nearly 1 percent for the month.
The ministry said June and July production fell 1.7 percent compared with April and May.
"The situation in the industrial sector will not improve any time soon," Alexander Koch, an economist at UniCredit, said, saying the economy could well slide into a technical recession -- two consecutive quarters of shrinking growth.
"In combination with the continuing strong fall in the assessment of backlog orders, the lack of fresh supply of orders argues for weakening industrial performance for the remainder of this year," he said.
Koch said weakening industrial performance is underpinned by weak business sentiment expectations -- namely the University of Munich's Ifo Indexes -- which he said "have been a relatively good leading indicator for the production dynamic in the past."
The Ifo has reached record lows in past months.
On Thursday, the European Central Bank said inflation, which is keeping consumers from large purchases as they pay more for food and fuel, also could continue to plague industry in the euro zone, limiting demand and expansion.
